Carolina Energy Management, LLC

Oil Prices Steady, But $80 Oil Is Coming, Says Analyst

By Tsvetana Paraskova - Sep 27, 2017, 12:00 PM CDT
Oil
Oil prices were basically flat early on Wednesday, but $80 oil could be just around the corner, according to analyst Jodie Gunzberg, head of commodity and real asset indices at S&P Dow Jones Indices in a CNBC interview on Wednesday.

While prices are holding just below highs from earlier this week after U.S. crude inventories surprisingly declined amid higher demand, Gunzberg sees a “real rebalancing” taking place in the oil market.

The catalysts, Gunzberg explains, are improved OPEC compliance, strong demand growth in China—not to mention Hurricane Harvey, which disrupted US refineries.

“When we look at the index data, we can see the price could move even as high as $80 to $85 (a barrel),” Gunzberg said, noting that this would not happen immediately. “…with their structural backwardation and shortages in the market, you just can't replenish it overnight," she said.

Another catalyst for higher oil prices is the fact that Turkey could cut off the crude oil flow from the northern Iraqi region of Kurdistan, Turkish President Recep Tayyip Erdogan said on Monday. That threat has sparked concern that cutting off Kurdish oil could take around 500,000 bpd off the market.

West Texas Intermediate hit US$52.22 a barrel at the close of trade on Monday, up by 3 percent, as the Kurdistan issue, coupled with evidence that the global overhang is depleting, joined forces to push up international benchmarks. WTI is now back in a bull market, having risen more than 20 percent since the June lows. Brent crude settled at US$59.02 on Monday, its highest since July 2015. On Tuesday, Brent settled 1 percent down, as investors took profits after the price had hit a 26-month high the previous day.

Earlier on Wednesday, the EIA reported a draw of 1.8 million barrels in United States crude oil inventories, compared to analyst expectations that inventories would build by 3.422 million barrels for the week ending September 22. Gasoline inventories built for the first time in two weeks, by 1.1 million barrels for the week ending September 22, against an expected draw of 921,000 barrels.

Weekly EIA Data Summary

US Crude ↓ 1.8m (471 mb)
Gasoline ↑ 1.1m (217.3 mb)
Production ↓ 37k (9.547mb/d)
Crude Exports 1.49 mb/d

When OPEC and its allies gather this week, they’ll have the best evidence yet that their efforts to clear a global oil glut are succeeding. It may prove short-lived.

Crude prices have rebounded to a three-month high and the world’s bloated fuel inventories are shrinking, signaling that nine months of production cuts by the alliance of the Organization of Petroleum Exporting Countries and nations including Russia are at last paying off. Yet as U.S. shale oil continues to thrive and seasonal demand wanes, the surplus that has weighed on markets for three years looks set to come back.

The latest Weekly Petroleum Status Report from the U.S. Energy Information Administration (EIA) highlighted the continued impacts of Hurricane Harvey on oil inventories and refinery operations. Data for the week ending September 8 demonstrated that total refinery utilization continued to decline, falling to 77.7% after sitting at 96.6% just two weeks prior. The downturn in refining resulted in another week of injections to U.S. crude oil stocks, while gasoline and distillate inventories declined.

U.S. crude oil refinery inputs averaged 14.1 million barrels per day during the week ending September 8, 2017, 394,000 barrels per day less than the previous week’s average. Refineries operated at 77.7% of their operable capacity last week. Gasoline production increased last week, averaging 9.9 million barrels per day. Distillate fuel production decreased last week, averaging about 4.0 million barrels per day.

Why bullish on oil for next 6 to 12 months?
Oil markets will keep rising despite a rash of bearish news.
I now expect Brent crude to reach $53 to 55 by early 2018 and I can see West Texas Intermediate reaching $51 to $53.
Rising demand and falling supply will keep the rally going.

Crude Oil WTI Futures - Oct 17 (CLV7)

Real-time CFD

49.30 +1.07 +2.22%
18:32:56 GMT - Real-time CFD Data. Currency in USD ( Disclaimer )
Type: Commodity
Group: Energy
Unit: 1 Barrel
Prev. Close: 48.23 Open: 48.35 Day's Range: 48.12 - 49.37
START TRADING NOW
Crude Oil WTI 49.30 +1.07 +2.22%

s.tradingview.com

Did you know that wind and solar projects provide more than just clean energy. Wind and solar projects also create jobs, supplement farmers' income and pay taxes that benefit communities.

Market Commentary and Intraday News
Midday Glance: Utilities companies

36 minutes ago

Shares of some top utilities companies are mixed at 1 p.m.:

American Electric Power Co. rose $.05 or .1 percent, to $45.41.

Consolidated Edison Inc. Holding Co. fell $.24 or .4 percent, to $56.91.

Dominion Resources Inc. rose $.20 or .4 percent, to $55.53.

Duke Energy Corp. fell $.41 or .6 percent, to $66.80.

Exelon fell $.62 or 2.0 percent, to $30.58.

PG&E fell $.04 or .1 percent, to $44.54.

Southern Co. fell $.22 or .5 percent, to $44.04.
(AP:NEW YORK)

Andrew Maykuth, Inquirer Staff Writer
Posted: Wednesday, June 12, 2013, 3:01 AM

A city panel Tuesday approved a Philadelphia Gas Works request to buy 24 natural-gas vehicles, even though the utility acknowledges it would cost less to buy conventional gasoline cars.

The Philadelphia Gas Commission voted to tack $438,000 onto the utility's $3.1 million budget next year for new vehicles to pay for the higher cost of the sedans, along with a compressed-natural-gas fueling station.

Despite a huge price advantage, natural gas is only slowly moving into the motor-fuel market because of high up-front costs. Even the city's natural-gas utility had to struggle to make a case for switching some of its fleet to CNG.

The measure, which still requires City Council approval, was dramatically scaled back from PGW's initial $1.9 million proposal, which the utility admitted was "less than compelling" economically. But PGW wants to switch over some cars to market CNG to fleet owners.

"A potential PGW fleet conversion will play a key role in the development of this market," Douglas A. Moser, an executive vice president, said in a letter to the Gas Commission.

The commission's staff said that even with cheaper fuel costs, the 24 CNG vehicles will cost $227,139 more to operate over seven years than conventional cars.